Weekly Business Insights from Top Ten Business Magazines | Week 329
Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Since September 2017 | Week 329 | December 29, 2023-January 4, 2024
Strategy & Business Model Section | 1
Starting your board journey: Six steps to guide director hopefuls
By Celia Hu et. al., | McKinsey & Company | December 13, 2023
Extractive Summary of the Article | Listen
Board service is an opportunity for personal and professional growth. The path to corporate directorship includes six core steps:
- Understand the board’s role and your objectives. At a high-level, the board is responsible for three key responsibilities: hiring and firing the CEO, overseeing long-term strategy, and guiding the company’s culture and ethics. Next, consider the types of companies you would like to serve. Make a list of the types of companies that align with your skills, interests, and purpose. Once you have verified that your employer allows you to serve on another company’s board, carefully consider whether you’re up for the demands of the role. Board service can require anywhere from 200 hours a year to 20-plus hours a week for boards of companies undergoing crises, and you should commit to serve at least five years.
- Raise your visibility. Building your profile and broadening your network can benefit any professional, but these moves are particularly important for those wishing to be considered for a seat on a corporate board. Think about the experience and attributes that would be sought by the board nomination committees of the companies whose boards you are most interested in joining. These criteria may well differ from what these companies would look for in executives. Board recruitment is largely relationship-driven—in short, it’s who you know. So look for ways to raise your profile in your industry, such as speaking at conferences, and build relationships with recruiting firms and connections on professional social media platforms.
- Do your homework. Director hopefuls should conduct thorough due diligence on companies whose boards they would be interested in joining. You can investigate the organization’s operations, challenges, and opportunities by reading news and analyst reports and speaking with people who know the company well, including board members and senior managers. Reading through 10-K/10-Q filings, proxy statements, annual reports, or other comparable documents can give you a clear picture of the company’s health. Complementing these perspectives with insights from investment bankers, trusted advisers, consultants, or external auditors may provide a picture beyond what’s publicly available.
- Make the interview a two-way conversation. During the interview, the board will look for evidence of your expertise, experience, and business acumen, and try to get a sense of you beyond what’s publicly available. How would you fit the culture of the company and the board? What values do you live by and how well do they mesh with the organization’s? While the qualities sought by boards vary, four traits will likely be present on all recruiters’ lists: intellectual curiosity, willingness to commit needed time, understanding of the director role, and humility and integrity.
- Select the right board. Before you decide to take on a board role, it’s a good idea to go deeper in your research to understand the company’s current performance and risks—for example, reviewing interviews and presentations by the CEO and requesting recent board decks. Don’t hesitate to request information and seek input that will help you make the decision.
- Find your place in the boardroom. Joining an existing director team can be intimidating, but you should remind yourself that you successfully navigated the selection process and should feel confident in the value you can add. To gain greater comfort with the board, try to meet each member before officially starting as a director, as building relationships and familiarizing yourself with the different viewpoints early can prevent conflicts down the line. New directors should also invest in getting to know the management team and key employees through a combination of formal and informal interactions to understand the business and identify top talent.
3 key takeaways from the article
- Board service is an opportunity for personal and professional growth. Directors can develop new skills and gain exposure to different governance processes and leadership styles. Recognizing the value such experience can bring, corporations are becoming more open to their senior executives serving on other companies’ boards. Meanwhile, the push for increased diversity in director background and expertise has slightly raised the board turnover rate, creating more director openings.
- Most individuals find the process of joining a corporate board mysterious, even intimidating. Whom do you contact? What are the selection criteria? How do you prepare? Can you serve on a board if you are an active executive? Finding the answers to these questions is worth the effort.
- The path to corporate directorship includes six core steps: understanding the board role and your objectives, increasing your visibility, researching the company and its industry, getting the most out of the interview, selecting the right board, and finding your voice as a director.
(Copyright lies with the publisher)
Topics: Corporate Board, Strategy, Leadership